We use cookies to customise content for your subscription and for analytics.If you continue to browse Lexology, we will assume that you are happy to receive all our cookies. For further information please read our Cookie Policy.

Corporate Crime Update - March 2016 - China, South East Asia & India

On 25 February 2016, China released the draft amendments to its Anti-Unfair Competition Law (the "AUCL") for public comment. The AUCL contains provisions prohibiting commercial bribery by business operators in connection with the sale of commodities and for profit services. The draft amendments touched upon these provisions, and once passed, would provide more guidance clarifying the commercial bribery offence in China.

ICBC Madrid Probed for Suspected Money Laundering and Tax Fraud

The Madrid branch of Industrial and Commercial Bank of China (ICBC), the China state-owned commercial bank, was raided by Spanish Civil Guards on 17 February as part of an investigation into suspected money laundering and tax fraud. Six ICBC executives were arrested. The bank's branch was suspected of having engaged in money laundering estimated at €40 million. The Chinese government has requested that the Spanish authorities handle the issue impartially and guarantee the legitimate rights of ICBC. ICBC published a statement on the Shanghai Stock Exchange website stating that its Madrid branch is cooperating with relevant Spanish authorities over the investigation and is operating as normal. ICBC also stated that it requires all its branches to strictly comply with anti-money laundering regulations in countries and regions in which they operate.

Government Launches Website to Assist Ezubao Investigation

Police have arrested the founder of China's largest online business Ezubao, Ding Ning, together with 20 of his employees in connection with what is reportedly China's biggest ever financial fraud. Ezubao, China's largest online peer-to-peer (P2P) lender which was established in July 2014 was placed under investigation in 2015 after authorities suspected it of conducting illegal activities and defrauding approximately 900,000 investors of over US$ 7.6 billion. Police raided the company after discovering that its executives were allegedly transferring funds and planning to flee. The Ministry of Public Security (MPS) has launched a website to gather facts about Ezubao, which allows the victims of Ezubao fraud scheme to register their information. According to MPS, the fraud "involves a large number of investors dispersed across the country, with huge amounts of electronic information". The website is expected to help with the ongoing investigation.

INDIA

Supreme Court find private bank governed by anti-corruption law

On 23 February 2016, India's Supreme Court ruled that chairpersons, directors, and officers of private banks are subject to the country's Prevention of Corruption Act, a law meant to prosecute government employees who commit acts of corruption. . The Supreme Court's decision overturned earlier decisions from the Delhi and Bombay high courts which held that anti-corruption laws do not apply to non-government officials. The Supreme Court explained that bank employees discharge duties which are of state and public interest. Therefore, performance of such public duties by a person is the "sine qua non of the definition of the public servant" contained in the provisions of the Prevention of Corruption Act.

Indian authority seeking assistance from UNCAC in its investigation against Walmart

Further to the news report in October 2015 that evidence was found by the US government that Walmart Stores Inc., the US retail giant, paid bribes to local Indian officials to obtain real estate approvals and customs clearances, in November 2015, India's anti-corruption watchdog the Central Vigilance Commission (CVC) summoned Walmart's India head and requested the company to provide information about the alleged bribes in India. Indian authorities have also sought assistance under the United Nations Convention against Corruption (UNCAC) with a view to obtaining further information from Walmart's US base.

Cadbury maker being investigated by India for alleged tax evasion

CVC is investigating Mondelez, the US based confectionary giant, for its alleged excise duty evasion of about Rs 580 crore (approximately US$84 million). The authority is also said to have started investigating the role of central and state government officials who might have facilitated the alleged evasion. This is the second major case (following the investigation against Walmart India) where the CVC has conducted an investigation involving a private company. It is also reported that the company also faces potential enforcement action in the US for the alleged bribery of government officials to obtain permissions to set up a factory in India.

An ex-financial controller and senior vice-president of Singapore Technologies Marine (ST Marine), Ong Teck Liam, has pleaded guilty to conspiracy to commit bribery. She allegedly conspired with other former ST Marine executives to approve false claims on entertainment expenses to fund cash commissions or bribes made by ST Marine officers to the company's customers to obtain business for the company. Three other former senior executives of ST Marine, including the former senior vice-president, the former president of commercial business and the ex-chief operating officer are also being charged with corruption.

TAIWAN

Former Cabinet secretary-general sentenced for corruption in the second ruling

Former Cabinet secretary-general, Lin Yi-shih, was found guilty of accepting bribes in February 2016 by the High Court of Taiwan. The High Court handed down a heavier sentence than in the first ruling by the Taipei District Court in 2013. Mr Lin was sentenced to a term of 13 years and 6 months in prison and also faces a fine of NT$15.8 million (approximately US$471,754). It is reported that while serving as a legislator and the head of a top-level Kuomintang policymaking body in 2010, Lin accepted bribes and helped a private company secure a contract with China Steel Corp (CSC). The High Court found that Lin was in a position to influence the financial operation and management of the state-owned CSC.